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Food Industry Recalls 101: Classifications, Causes, and Costs

October 15, 2015

Each Wednesday, the U.S. Food and Drug Administration (FDA) publishes an enforcement report that identifies recalls for the previous week. The report details the products and lots that were recalled, the companies that recalled the products, the reason each product was recalled, and the classification of each recall.

There are three different recall classifications:

Class I – Identifies recalls of dangerous or defective products that may cause serious health problems or death.

Class II – Identifies recalls of products that may cause a temporary health problem. There is a low likelihood that the product will cause a serious threat.

Class III – Identifies recalls of products that are unlikely to cause any adverse health reaction.

There are many reasons a product may be recalled. In October 2014, FDA stated that undeclared allergens were the most common cause of FDA-requested recalls. Undeclared allergen recalls are often designated as Class I, as consumers with food allergies could be in significant danger if they unknowingly consume an allergen. Another common cause of food recalls is labeling mistakes. Labeling issues are often designated as Class III recalls, as many common labeling mistakes do not pose a threat to consumer health.

FDA may discover a product that must be recalled during a routine facility inspection. FDA may also determine a product needs to be recalled due to a report from a consumer or the Centers for Disease Control and Prevention (CDC). Sometimes a company itself discovers a problem with its product and contacts FDA. No matter how a recall is initiated, one thing is for sure: it’s not cheap. According to Beth Kowitt, a writer for Fortune Magazine, “eighteen percent of [companies with recalls] said the hit from the recall and lost sales was between $30 million and $99 million; 5% said the financial impact was $100 million or more.” These monetary losses don’t include the damage to a company’s reputation that is often associated with a recall.

The number of annual FDA recalls, market withdrawals, and safety alerts has nearly doubled in the past decade. According to data available in FDA’s archive, there were approximately 396 incidents in 2014 as opposed to approximately 199 in 2004. This increased chance of being subjected to a recall (and all the associated damages) means that food facilities should take additional steps to ensure FDA compliance. Registrar Corp offers various services to help food facilities avoid situations that could lead to a recall.